Preprints
https://doi.org/10.5194/egusphere-2023-1750
https://doi.org/10.5194/egusphere-2023-1750
04 Sep 2023
 | 04 Sep 2023

Driving sustainability transitions through financial tipping points

Nadia Ameli, Hugues Chenet, Max Falkenberg, Sumit Kothari, Jamie Rickman, and Francesco Lamperti

Abstract. Achieving a net-zero carbon economy requires significant structural changes in the financial system, including a substantial shift in investment towards low-carbon assets. Through the alignment of expectations, promotion of herding behavior, utilization of public finance, reduction of capital costs and attainment of low-carbon investment thresholds in developing nations, and implementation of robust financial regulations and policies, the financial system can assume a central role in re-orienting economies onto a net-zero course. Taken together, such mechanisms highlight the positive tipping points that can be triggered within sustainable finance and emphasize the necessity of policy interventions to activate and capitalize on these dynamics. The identification and activation of critical and positive tipping points can lead to the amplification of sustainable investments and foster transformative changes in the practices of the financial sector.

Nadia Ameli, Hugues Chenet, Max Falkenberg, Sumit Kothari, Jamie Rickman, and Francesco Lamperti

Status: final response (author comments only)

Comment types: AC – author | RC – referee | CC – community | EC – editor | CEC – chief editor | : Report abuse
  • RC1: 'Comment on egusphere-2023-1750', Charlotte Gardes, 03 Oct 2023
  • RC2: 'Comment on egusphere-2023-1750', Anonymous Referee #2, 25 Dec 2023
Nadia Ameli, Hugues Chenet, Max Falkenberg, Sumit Kothari, Jamie Rickman, and Francesco Lamperti
Nadia Ameli, Hugues Chenet, Max Falkenberg, Sumit Kothari, Jamie Rickman, and Francesco Lamperti

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Short summary
Transitioning to a net-zero economy necessitates significant changes in the financial system. By promoting collective behavior, aligning expectations, using public finance, reducing capital costs and encouraging low-carbon investments, the financial system can play a crucial role in re-orienting economies onto a net-zero course. These mechanisms underscore the potential for positive tipping points in sustainable finance and stress the importance of policy interventions to capitalize on them.